The city's housing market has cooled slightly – but activity remains significantly elevated above long-term trends
The pace of sales growth in Calgary’s housing market slowed slightly in April compared to the opening months of the year – but with purchase activity a stunning 37% higher than long-term trends for the month, the city’s housing boom is showing little sign of fading.
The Calgary Real Estate Board (CREB) said at the beginning of May that new listings were also on the rise in the city, jumping by 11% year over year to 3,491, although that remains only slightly above long-term trends.
Max Singh (pictured top), a broker with TMG The Mortgage Group based in the city, also pointed to positive labour market conditions and a “significant” increase in housing starts as factors that were likely to keep Calgary’s housing market ticking along.
In April, housing starts across Alberta spiked – jumping to 3,816 units, up 62% compared with the same month last year.
“There’s continued development of multi-unit homes,” Singh told Canadian Mortgage Professional. “We’re seeing a lot of demand from developers to negotiate for construction on these [types of] homes due to incredibly low vacancy rates in the rental market.
“So there’s some change in government legislation surrounding taxation and the removal of GST for some of these projects.”
Which factors will influence the future direction of Calgary’s market?
Singh noted that every asset class, from single-family detached to semi-detached and row, posted significant sales gains on a year-over-year basis in April, with the latter in particular seeing a surge.
The likelihood of that pace of market activity continuing could depend on the inflation and interest rate outlook, he added, with oil and gas prices also exerting a big influence on the regional economy.
Natasha Bridgmohan of the Bridg Group of Companies, stresses the importance of staying informed on economic indicators to provide clients with accurate advice in the current housing market.https://t.co/fyzRNGIAy9#mortgageindustry #mortgagebroker
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 16, 2024
Conversely, high population and income growth – both internationally and interprovincially – may keep activity elevated, especially with young adults (18-24) and young working professionals (25-44) viewing Calgary as an especially attractive proposition.
Of course, Calgary buyers aren’t immune to affordability issues, especially with rates remaining elevated. That’s pushing higher-priced asset classes, such as single-family detached homes, out of the reach of many buyers, although other segments and the apartment sector are witnessing steady and growing demand.
How are buyers reacting to the prospect of an impending BoC rate cut?
With a possible Bank of Canada rate cut looming – in either June or July, according to many observers – some buyers may be deciding to take a wait-and-see approach at present as they weigh up the prospect of rates ticking lower in the coming months.
That could be a factor behind slower sales activity for April compared with the first three months of the year, according to Singh. “I’ve noticed that the activity locally here in Calgary, and limited inventory and buyer fatigue, [is] going [down] from having 20 offers on a property,” he said. “From the information I’ve gathered from realtors it’s still competing offers – but now it’s down to maybe five or six versus 20 previously.
“So with one individual winning that right to get the home, a lot of folks have stepped back from the buying cycle or are now just waiting to see what the government does over these next couple of months.”
Areas around Calgary, however, are seeing activity continue to grow “substantially,” Singh said, with affordability not as sizeable a challenge in cities like Medicine Hat – around three hours southeast of Calgary.
Still, the prominence of out-of-province bidders is causing headaches for some local would-be buyers, many of whom are entering the market with substantial buying power and in some cases intending to purchase multiple homes.
In Edmonton, for instance, bidders from outside the province have been known to purchase at well above asking price with no-conditions, all-cash offers, Singh said, something that’s not as common in that city as in some of the more intense regional housing markets across Canada.
For Calgary, a dramatic uptick in rental prices has also squeezed on affordability, with that growth expected by Canada Mortgage and Housing Corporation (CMHC) to continue well into the future.
“We expect an average rent for two-bedroom apartment units to increase further this year and then until 2026,” Singh said, “so all signs point to pain continuing forward for local homebuyers, potential homebuyers and for anyone who is in that rental market. It doesn’t look like there’s going to be any respite anytime soon.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
